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Cash Book - Part 2

"Triple your efficiency with Triple Column Cash Book!"

After learning Single and Double Column Cash Books, we now explore the Triple Column Cash Book and Petty Cash Book.

Triple Column (Three Column) Cash Book

Purpose: Record cash transactions, bank transactions, AND discounts - all in ONE book.

Columns:

  • Discount Column (Dr. and Cr. sides)
  • Cash Column (Dr. and Cr. sides)
  • Bank Column (Dr. and Cr. sides)

Format of Triple Column Cash Book

Dr.                       Cash Book                           Cr.
------------------------------------------------------------------------
Date|Particulars|L.F.|Disc.|Cash|Bank||Date|Particulars|L.F.|Disc.|Cash|Bank
----|-----------|----|----|----|----||----|-----------|----|----|----|----|
    |           |    |    |    |    ||    |           |    |    |    |

Example: Triple Column Cash Book

Transactions for January 2024:

  1. Jan 1: Cash in hand ₹20,000, Cash at bank ₹50,000
  2. Jan 5: Received from debtor Ramesh ₹9,500 (allowed ₹500 discount)
  3. Jan 8: Paid to creditor Mohan by cheque ₹7,800 (received ₹200 discount)
  4. Jan 12: Deposited cash into bank ₹10,000
  5. Jan 15: Withdrew from bank for office use ₹5,000
  6. Jan 20: Paid salary by cash ₹8,000
  7. Jan 25: Received cheque from customer ₹15,000, deposited same day

Triple Column Cash Book:

Dr.                          Cash Book                              Cr.
--------------------------------------------------------------------------------
Date|Particulars    |L.F.|Disc|Cash  |Bank  ||Date|Particulars   |L.F.|Disc|Cash |Bank
----|---------------|----|----|------|------||----|--------------|----|----|----- |-----
Jan1|To Bal b/d     |    |    |20,000|50,000||Jan8|By Mohan      | C  | 200|     |7,800
Jan5|To Ramesh      |    | 500| 9,500|      ||Jan12|By Bank A/c  | C  |    |10,000|
Jan12|To Cash A/c   | C  |    |      |10,000||Jan15|By Cash A/c  | C  |    | 5,000|
Jan15|To Bank A/c   | C  |    | 5,000|      ||Jan20|By Salary    |    |    | 8,000|
Jan25|To Customer   |    |    |      |15,000||Jan31|By Bal c/d   |    |    |11,500|62,200
----|---------------|----|----|------|------||----|--------------|----|----|----- |-----
    |Total          |    | 500|34,500|75,000||    |Total         |    | 200|34,500|75,000
================================================================================
Feb1|To Bal b/d     |    |    |11,500|62,200||    |              |    |    |     |

Notice "C" in L.F.: Indicates Contra Entry (appears on both sides).

Understanding Contra Entries

Definition: Transactions appearing on BOTH sides of the Cash Book (cash-bank transfers).

Types:

  1. Cash deposited into bank → Debit Bank, Credit Cash
  2. Cash withdrawn from bank → Debit Cash, Credit Bank

Why "Contra"?

  • Both accounts (Cash and Bank) are in the same book
  • No separate ledger posting needed
  • Mark with "C" to avoid posting to ledger

Calculation Example

Petty Cash Book

"For the small stuff - tea, stationery, taxis, etc."

Purpose: Record small routine expenses to keep the main Cash Book clean.

Imprest System: Most common method for petty cash.

Imprest System

How it works:

  1. Fixed amount (e.g., ₹5,000) given to Petty Cashier at month start
  2. Petty Cashier spends on small items
  3. At month-end, spent amount is reimbursed
  4. Next month starts with same ₹5,000

Example:

Step 1: Jan 1 - Petty Cashier receives ₹5,000
Step 2: During Jan - Spends ₹3,500
Step 3: Jan 31 - Receives ₹3,500 reimbursement
Step 4: Feb 1 - Starts with ₹5,000 again

Format of Petty Cash Book

Receipts | Date | Particulars    | V.No. | Total | Postage | Stationery | Conveyance | Misc.
---------|------|----------------|-------|-------|---------|------------|------------|-------
5,000    | Jan1 | To Cash        |       |       |         |            |            |
         | Jan5 | Postage stamps | 1     | 200   | 200     |            |            |
         | Jan8 | Pens & Papers  | 2     | 150   |         | 150        |            |
         | Jan12| Auto fare      | 3     | 80    |         |            | 80         |
         | Jan31| Balance c/d    |       | 4,570 |         |            |            |
---------|------|----------------|-------|-------|---------|------------|------------|-------
5,000    |      |                |       | 5,000 | 200     | 150        | 80         | (570)

Month-End:

  • Total spent = ₹200 + ₹150 + ₹80 = ₹430
  • Reimbursement = ₹430
  • Next month imprest = ₹5,000

Real-World Case Study

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Advantages of Petty Cash Book

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Comparison: Cash Book Types

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Exam Tips

Common Question: "Pass journal entry when petty cash is reimbursed."

Answer:

Petty Cash A/c              Dr.    ₹3,500
    To Cash A/c                        ₹3,500
(Being petty cash reimbursed)

Quiz: Cash Book Part 2

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